Walmart Warns Slowing Sales as Gas Prices Drain Consumer Budgets

BBC Business reported Thursday that Walmart is warning high gas prices will meaningfully slow its sales growth in the months ahead, offering a sobering read on the state of American household finances.

Sales Outlook Cut as Fuel Costs Rise

The retail giant posted a strong first quarter, with revenue of $177.8 billion for the February-to-April period. That represented a 7.3% year-on-year increase. Net profit reached $5.3 billion, up nearly 19% from the same period last year.

But the outlook told a different story. Walmart now expects revenue growth of just 4% to 5% for the May-to-July quarter. That compares unfavorably with the prior period’s pace. Investors responded sharply, sending shares down 7% on Thursday morning.

What Is Driving the Pressure

Walmart finance chief John David Rainey pointed squarely at the pump. Average US gasoline prices have climbed to $4.56 per gallon, up from roughly $3 when the Middle East conflict began. The surge in wholesale oil prices stems from the ongoing war with Iran, which has disrupted global energy markets.

Rainey told CNBC that unusually large tax refunds following President Donald Trump’s One Big Beautiful Bill Act had cushioned shoppers in recent months. That buffer is now fading. “As we’re in a period of time right now where those tax refunds are largely not coming in, I think consumers are going to feel more of that pressure from higher fuel prices,” he said, per BBC Business.

Background: Iran War Reshaping Retail Economics

The Iran conflict has created cascading effects beyond the gas station. Closure of the Strait of Hormuz has disrupted shipping lanes critical to global fertiliser and commodity supply chains. Rainey warned on the investor call that a prolonged blockade could force Walmart to raise food prices. Shortages of nitrogen, phosphates, and fertiliser feedstocks are increasingly a concern for the retailer’s grocery operations, which account for a large share of total revenue.

Walmart is the largest private employer in the United States. Its earnings reports are widely watched as a proxy for the health of mainstream American consumers, particularly lower- and middle-income households most exposed to energy cost swings.

Retailers Brace for Tougher Second Half

The company said it is monitoring gas prices closely and does not expect meaningful relief in the near term. With tax-refund tailwinds largely exhausted and fuel costs holding elevated, analysts expect other large-format retailers to revise their own guidance downward in the coming weeks.

US inflation rose to 3.8% in the most recent reading, driven largely by energy costs tied to the Iran war.

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